Banks slated to take over Granite Run Mall: update
Simon Property has fallen behind on its payments for Delaware County's Granite Run Mall
Banks slated to take over Granite Run Mall: update
Joseph N. DiStefano
Granite Run Mall, on US 1, west of Media, boasts Boscov's, JCPenney's, Sears, at least 100,000 square feet of vacant space, and a likely sale or transfer to creditors later this year.
Owners Simon Property Group Inc. of Indianapolis and Macerich Co., Sta. Monica, Calif., fell behind last fall on $115 million in debt on the property, according to Realpoint LLC of Horsham. Granite Run is worth around $94 million, down from more than $150 million back in 2006, according to Realpoint. "The borrower has stated that they are unable to make future debt service payments, and want to give the property to the lender via a deed in lieu" of payment," Realpoint managing director Frank Innaurato told me. The target date for the lenders to take over is March 1.
Simon "is handling that matter, but it most likely will not be owned by that joint venture a year from now," Macerich boss Arthur M. Coppola told investors in his Feb. 8 conference call.
Simon hasn't announced its plans, which may be the news: On Feb. 4, boss David E. Simon listed six big malls he's "redeveloping" - including sites in his Indianapolis hometown and in Las Vegas, Pensacola and other warm places - and gave a partial list of 18 more he's "modernizing" - mostly in the South and Midwest.
Nothing about Granite Run. But, Simon said, "when the opportunity ceases to make sense for us, we can and will walk away." He didn't return my call seeking comment on Granite Run.
"Walk away" is what other owners have done at malls where they owed more than they wanted to pay, including Taubman Centers' Pier Shops at Caesars in Atlantic City, notes the Wall St. Journal here.
The malls stay open, but with new owners - creditors, or bargain-hunting investors glad to buy retail real estate at a fraction of the previous price.
As you can see with the corporate mindset of private capital, they can just walk away. State and Federal governments can not just walk away from society, and leave the power vacuum behind to strongest and most privileged. The bad investments or the bad economy can create casualties. It is important to distinguish among the important institutions which may be worth saving. Another shopping mall probably does not qualify as a critical asset in the economy, unless there is the disposable income of a vibrant middle class to support. Hopefully, if not Simon, someone can position this mall for success and allow it to serve the community for a long time.
the place has been on the decline for years...all those shopping outlets in that area that were such booming businesses years ago are just shadows of what used to be. Granite run, springfield, marple center, etc...— IcanTakeit
There used to be a time when men stood behind their obligations and did everything to satisfy them in order to keep their reputation and good name. Nowdays, pusilanimous pipsqueks like David E. Simon hide behind a veil of lawyers and thier mumbo jumbo contract language and just walk away.- Simon is, by far, the shrewdest, most capable, best-capitalized mall operator in the world. If they can't make Granite Run work, it's probably done. However, don't be surprised if someone less smart (PREIT?) tries to buy it from the bank cheap and it flounders for a few more years before finally dying.— atd
- Marple Crossroads is rebuilding.Granite Run's biggest problem is not the stores that has it's the distance to get there.By bus it's one hour. The stores serve their purpose.— vrb1955
- I used to go to Granite Run almost every weekend. Now we shop online, mostly at Amazon.com. I was in Granite Run a few weeks ago for the first time in years. At least 1/3 of the stores are empty and several holding closing sales. Simon needs to cut the rents now to get stores or this mall will become like the McDade Mall, i.e. dead.— fischman
- The story I heard is that Riddle is going to buy it to use as a medical research facility. Anyway you look at it, it's sadly in decline, and a LOT of stores have closed.— uncle meat
- The hospital says that's an urban legend & untrue, they're not planning on taking over the mall.— distefj
That Mall had a nice run from the 70's to mid 90's. Most people in that general area are automatically drawn to Concord De to capitalize on the 0% sales tax on everything. OR Concordville which continues to develop and is much more vibrant.
Middletown is just dullsville, it has a very poorly designed commercial stretch about the worst I have ever seen.Developers want to build a beautiful $100 M + town center that would be right on the R-3 Wawa station and they are thumbing their nose at that.
The probably should knock that Mall down and build a mixed use project. Apts/Condos/retail/green space but Im not getting my hopes up this township is pretty clueless.- Mr. DiStefano, I hope that you see why the average Joe Blow feels that he/she can walk away from their home mortgage and leave it with the bank. This will probably be a move that is not frowned upon by lenders because of who is doing it (a big corporation). Will this adversely affect their ability to obtain funds? Probably, not! It probably won't affect their credit rating much either. It's lousy financial game played in this country ---- discriminatory by race, gender, zip code and whole passel of other schemes.— Anne Arkey
- Sure, it may be legal but is it morally right? The ENTIRE financial system runs on trust (credit and debt are issued based on your trust you will be paid back). If you want to fix the financial system, you need to restore trust.
- Joe, will you do a post on non-recourse financing to educate these armchair CFOs? Simon did not promise to repay the loan. Instead, Simon gave the lenders the right to foreclose on the property if it failed to pay periodic principal and interest. The lenders knew that they faced losses if the property declined in value, and they knowingly accepted asset-specific risk. Simon is acting completely in the spirit of its agreement with the lenders.
And, Simmon is not walking away unscathed. It's taking a 100% loss on its investment in the mall, likely $35 million. The lenders will recover a large part of their investment.— clay house - Clay, thanks, you did it for us all. Joe D.
— Joe D - As of April 1, 2011, we are under new management. We have great confidence that our new management company, Madison Marquette, will not only renew the physical appearance of the mall, but also its effect on the surrounding community. With a stellar track record of taking struggling centers and renewing not only their physical appearance, but also their leasing practices, it is sure to be a great partnership.
Please read the full press release at http://www.shopgraniterunmall.com/pdfs/GranitePressRelease.pdf. We welcome any comments on our Facebook wall at http://facebook.com/GraniteRunMall.— GraniteRunMall
